On Tax Day this year, President Biden once again bragged that he released his tax returns—as if that alone proves his integrity. But to paraphrase Winston Churchill, Biden should be more modest about his tax behavior, because he has much to be modest about.
The record not only shows that Biden and his wife used a loophole to avoid payroll tax payments that fund Social Security, Medicare, and Obamacare. It also strongly suggests that Joe Biden abused that loophole, in ways that led to deliberate and significant underpayments of taxes.
Because of those actions, and the evidence supporting this account, I recently filed complaints with the Internal Revenue Service against both Biden and his accountant regarding their actions. If and when Republicans take control of Congress next year, they should follow up by investigating Biden’s questionable conduct.
Upon leaving the vice presidency in 2017, Biden and his wife Jill funneled their book and speech income through two S-corporations. By characterizing more than $13 million of that income as corporate profits rather than wages, the Bidens avoided paying more than $500,000 in payroll taxes.
Ironically enough, the Biden administration has proposed closing this very loophole, with the Treasury claiming it allows individuals with “high incomes to avoid paying their fair share of taxes.” Democrats in Congress have similarly proposed closing the “Biden loophole” in their $5 trillion Build Back Bankrupt legislation. While Biden previously exploiting a loophole he now wants to close makes him a hypocrite, it doesn’t automatically make him a tax cheat.
But Biden paid himself such a low salary that multiple tax experts believe he violated federal tax guidelines. For starters, in 2017 Biden paid himself a 37 percent lower salary—just under $150,000—than the $230,700 he received as vice president. To ask the obvious question: What Washington dignitary earns less after leaving office than he earned while serving in the federal government?
In this case, the answer is equally obvious: The lower the salary Biden paid himself, the more money he could classify as corporate profits—and the more in payroll taxes he could avoid. Little wonder then that, on an inflation-adjusted basis, Biden in 2017 paid himself less than the annual salary he received in each of 46 of his years of service as a senator and vice president.
Biden underpaid himself relative to his peers, too. Data from the IRS’ Statistics of Income show that in 2017, firms with the same amount of revenue as Biden’s corporation—companies with between $5 million and $10 million in revenue—paid their executives salaries averaging 33.6 percent of net income. By comparison, Biden paid himself a salary of only 1.51 percent of his company’s net income in 2017, and 9.9 percent of his company’s net income in 2018, indicating he was deliberately underpaying his salary to avoid payroll taxes.
Consider too that Treasury Secretary Janet Yellen, after leaving office as Federal Reserve Chair, received an average of $126,509 for making 57 separate speeches in 2019 and 2020. Unlike Biden appears to have done, Yellen did not attempt to dodge payroll taxes by funneling her speech revenue through an S-corporation.
Former Secretary of State Hillary Clinton charged an even higher amount, setting $225,000 as her standard per-speech fee. Yet even as he feverishly worked the lecture circuit himself after leaving the vice presidency, Biden paid himself in salary for an entire year less than what Clinton charged for a single speech—all apparently so he could lower his payroll tax bill.
Complaints Pending with IRS
Tax experts have publicly criticized Biden’s tactics, saying he underpaid his salary by millions of dollars—improperly avoiding thousands and thousands of dollars of payroll taxes on that income. After reading their opinions, and conducting my own analysis, I submitted a complaint to the IRS several months ago, asking the IRS to investigate Biden’s returns and recoup his underpayment.
I also recently filed a complaint against Biden’s accountant, Walter Deyhle. Under the IRS standards for accountants, Deyhle had an obligation to undertake the type of analysis I outlined above, which would have shown Biden needed to pay himself a far higher salary. Either Deyhle did not do this analysis, making him negligent, or Biden ignored his accountant’s advice and underpaid himself, and Deyhle improperly signed Biden’s tax return anyway.
Congress Should Act
If they retake control of Congress in November, Republicans should use the precedents set in the dispute over President Trump’s tax returns to subpoena Deyhle’s files, to uncover the facts about Biden’s taxes. Did Deyhle tell Biden his actions likely violated IRS guidelines, and if so, why did Deyhle sign Biden’s return?
Congress should also investigate why the IRS has had Trump’s returns under audit for more than a decade, while declining to audit Biden’s returns from the years before he became president, notwithstanding the public criticism Biden’s returns have received. The disparate treatment of two politicians regarding questions about their taxes leads to the additional question of whether IRS bureaucrats allowed ideology to influence their conduct, in a potential reprise of the Lois Lerner scandal.
Ironically enough, for all the effort Democrats have made to subpoena Trump’s taxes, their purported reasons for demanding his returns seem much less compelling than the IRS treating politicians of two different parties differently with respect to audit decisions. (While being in a hurry to subpoena Trump’s taxes, they have shown no desire to investigate Biden’s questionable tax returns.) And if an investigation revealed that political motivations played a role in the decision to decline an audit of Biden’s taxes, that would obviously necessitate further action by Congress, to (again) rein in an administrative state run amok.
The American people deserve a tax system that treats everyone equally under the law. When one expert says that “whether the IRS would be willing to” require Biden to pay back taxes is “questionable” given his role as chief executive, it undermines the effectiveness of the tax code for all Americans. To lead by his own example, Biden should pay back the taxes he owes—and if he doesn’t, Congress should investigate why the IRS has not held him to account.
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